81. Welcome. May I say that if The British Council
has a close working relationship with this Committee the World
Service has no less. We have followed and tried to monitor the
activities of the World Service with the same vigour and same
enthusiasm. I hope we can maintain that tradition today. Were
you sitting in on the exchanges with The British Council?

(Mr Byford) Yes, I was.

82. In a way my first question follows up a
bit of a line we were pursuing with The British Council. You say
in your submission that your analysis is that power is shifting
away from governments to business elites. Is this going to be
a shift in the whole audience the BBC World Service is trying
to reach? Is it going to reach business elites or is it going
to reach people?
(Mr Byford) It may have been saying that in relation
to business programming, but we certainly do not want in terms
of audience only to get business elites. We actually make it clear,
as I think I have done with the Committee before, that we do not
just look at the audience as one homogeneous whole. We break the
audience into certain groups, whether it is opinion formers and
decision makers, whether it is people who are aspiring to a world
view and wanting to come through the World Service to connect
with that global perspective, the information poor, as you were
discussing with The British Council, are obviously a critical
audience for the World Service and will remain so and crisis audiences
in areas of major conflict where we shall be wanting to reach
everybody who is affected by that crisis. There is nothing in
this which in any way dilutes the importance of all those groups,
it just means we must recognise that we will reach them through
different delivery methods.

83. Do you have a central objective of reaching
out to the poorest who can afford to hear you?
(Mr Byford) Yes. What we have done over the last few
years is recognise firstly that audiences should benot
are but should besegmented and also that there are different
broadcasting market bases across the world. Of course the United
States is a very different place to Afghanistan in terms of technical
delivery and audience needs. We say that in the most developed
areas of the worldthe United States would be an example,
western Europe, Australiawe do not stop people listening
to it but the target audience group is opinion formers and decision
makers. In many areas of the world, across the developing world,
of course we target that group but also those who are aspiring
to be connected with other parts of the world and come to that
through the World Service. In an area like Afghanistan, Nigeria,
Rwanda, we would be not just wanting those groups, but also we
would be wanting the information poor as well. In an area of crisis
you are wanting to reach everybody.

84. In our last exchange with The British Council
we ended with partnership. May I just pursue this with you? You
have created working partnerships with The British Council. How
new is this? Have you tended to work in parallel or have you always
had partnerships?
(Mr Byford) The relationship with The British Council
has been a long one. What has changed in the last year has been
that we have signed a Memorandum of Understanding between The
British Council and ourselves on the back of David Green and myself
joining the Council and the World Service respectively. We thought
that it was important to have some coherence about our relationship.
It was not establishing one for the first time. It was just bringing
coherence to it. The BBC World Service and The British Council
are working on more than 30 projectsonce we had assessed
that relationship. We have a Memorandum of Understanding which
means that Mr Green and myself meet every six months to discuss
current projects, to discuss future potential possibilities and
for our teams to have an intranet site. That means between The
British Council and the World Service, at any given moment, they
can click on and see which projects we are working on together,
who is involved in them, what the aim is and their timespan.

85. Are you saying that this new Memorandum
of Understanding was just codifying what was already informally
being done over a period of time or does it give a new dimension
to the working partnership between you and The British Council?
(Mr Byford) I hope it does both. Its first driver
is to make sure that we both know what we are doing together.
Secondly, you would rightly be troubled and I would be too, if
you asked whether we and The British Council ever meet, ever talk
about potential projects, have any understanding of what we are
doing together. This is what that Memorandum of Understanding
brought: the importance of us coming together at least twice a
year with our teams to discuss what we are doing today.

86. You quoted China as a pilot scheme in one
instance but you say there are 30 such other joint projects.
(Mr Byford) Yes.

87. Give me a flavour of some of the others.
(Mr Byford) There is one called "football nation"
I know which is bringing together the importance of soccer as
a world sport which connects different communities together through
us both working together. There is the CELLS project with China.
There is drama and play writing, things like that, a number of
projects, some last for a long time, some for a short time.

Mr Rowlands: Sir John has been following with
equal vigour your funding arrangements.

Sir John Stanley

88. May I make a small preliminary point which
is not without significance as far as the way the Committee operates?
We do try to be user friendly, not least to members of the public
and others who take our submissions. You may like to consider
an alternative colour presentation which does not have the effect
of blanking out all the key lines in your submissions to the FAC
when they are photocopied. May I just leave that thought with
you?
(Mr Byford) May I apologise for that? However, I would
say that we submitted colour. We would have been aware, had it
got to a photostat, that that was what happened. We shall do a
different version for the public which they can clearly see.

89. On the financial side, may I deal first
of all with the operating costs side and then with the capital
side. On the figures which are in your submission to us, it shows
over the next three-year period 2001-02 to 2003-04 that on the
operating side you made a bid for £54 million, of which you
received £35 million, in other words you have come away with
two thirds of what you asked for. If you had had the whole of
your bid on the operating side, how would the additional £19
million have been spent? In other words, what are you not being
able to do that you would have been able to do if you had got
the whole of your operating bid?
(Mr Byford) That is right, of the total bid we got
78 per cent but in operating terms we got about 65 per cent of
it. Where were the shortfalls as against the bid? Firstly in online.
Although we say that we want to spend just over £11 to £11.5
million by that third year, actually in the first original bid
I think I am right in saying that was taken to £15 million.
Secondly, in content terms, we say that we shall be focusing on
the Balkans. We would have been wanting to do more in Indonesia
and Iran. In FM we would actually have spent more on FM expansion
than we are putting in the bid now, because there is a shortfall.
We would have spent a bit more on business programming and in
capital terms we got all we required but re-phased.

90. I shall come to the capital side in a moment,
if I may. Would I be right in summarising that the increased resource
you have got on the operating side is overwhelmingly going to
strengthen your online services and particularly in the language
you refer to in page 9 of your submission?
(Mr Byford) It would be right to say that the operating
is focused on three key areas: firstly, online development in
major languages and all our audio being available on the internet;
secondly, FM expansion, although in pecuniary terms that is lower,
it is still a very important initiative for us; then a number
of content initiatives. One other shortfall we would have had
from the original bid was that we were keen to increase our regionalisation
of our programming, versioning across the world. We have done
quite a lot of that in the last two or three years; we wanted
to pursue that harder but the shortfall in the money means we
cannot do that at a level we originally hoped.

91. On the capital side you come away with a
full 100 per cent of your capital bid: you bid for £29 million
and you got it. Well done you. That is going overwhelmingly on
this very big capital investment programme in your transmitters
in Cyprus and Singapore, which hopefully will produce a fairly
dramatic improvement in audibility in the Middle East and the
Far East. Welcoming that, does that mean in terms of your relative
priorities that areas like Latin America and Africa are very,
very much second priorities? In particular, those of us who in
the last Parliament went to South America will have seared on
our memories the accounts we received from one British Ambassador
of the way in which he was only able to access your short wave
by going into his bathroom, standing on his lavatory seat and
holding his radio up aloft in his arms. Does it mean that is going
to be the only way our ambassadors in Latin American countries
are going to be able to hear BBC World Service for the foreseeable
future? Is that the implication of what we are being told here?
(Mr Byford) No, not at all.

92. Good.
(Mr Byford) Firstly, in the capital programme, because
the Cyprus and Singapore transmitters are up for renewal within
the timetable of our overall capital programme and within this
spending review programme, that is why they have generated new
capital investment for digital capable short-wave transmission.
It is important that while stressing much of the focus of it is
about online and FM expansion, there is an awful lot of investment
going into enhancing short-wave audibility. On the specifics of
Africa and South America, Africa will, for many years to come,
be a short-wave broadcasting proposition for the World Service,
but not only short wave. It is really important that I understand
this and all my team understand this. In Nigeria, for instance,
if we were only a short-wave broadcaster, we would be in real
trouble. We must be on FM in the major conurbations whether it
is Lagos, Abuja, Port Harcourt, Kano. We have to be on FM as markets
deregulate and more and more stations are available on FM. For
us to say we will only be short wave would mean a serious decline
in audience. Meanwhile in the major rural areas of Nigeria, to
say we will only be an FM broadcaster, would be literally throwing
away millions of listeners. We are going to be a short-wave broadcaster
there, but also expanding our FM in major conurbations and for
certain groups even in Africa the internet will be important but
that will be small there. I have just come back from Argentina
and Brazil so I know at first hand the problems with audibility
in South America. The key for success for the World Service in
South America is to enhance our FM and rebroadcasting partnerships
in both Brazil and Argentina. The fact that in Buenos Aires we
are on FM in English and in Spanish is a key to success, because
short wave is very poor there. In Brazil we have rebroadcasting
partnerships in terms of radio, but we are also pursuing internet
partnerships hard now so that people can access the BBC's service
both in Portuguese and in English in medium-wave quality sound
minimum, if not FM quality sound on the internet. That should
be our delivery strategy for there.

93. An issue we have pursued over a long period
in this Committee relates to the BBC and concerns your fellow
organisation BBC World TV. In our various reports we have expressed
great dismay at the way in which BBC World TV was knocked off
the satellite by the Murdoch organisation, particularly as far
as its broadcasts into China were concerned. We have read recent
reports that BBC World TV has actually now managed to get back
into the satellites over China. Can you confirm that is the case?
Can you give us any information as to how that negotiation with
the Chinese authorities is going?
(Mr Byford) Yes, I can confirm in part what you said.
Firstly, obviously you understand this, I do not have direct responsibility
for BBC World because it is a commercial proposition. However,
in the marketplace it is extremely important for World Service,
our online operations and World, to be operating effectively together.
I visited China in January of last year, where I pursued with
the authorities there the ability for BBC World to have a licence
in hotels, guesthouses, exactly the same as CNN enjoyed. That
was taken up further by Rupert Gavin, the Chief Executive of Worldwide
and the Managing Director of BBC World, Patrick Cross. About two
months ago we learnt that a licence has been granted for BBC World.
That is good news.

Sir John Stanley: Perhaps we might have an update
from BBC World TV on that area.

Mr Rowlands

94. Could you provide us with an update?
(Mr Byford) Absolutely; yes.

95. I do not know whether it was the first occasion
when you came before our Committee but it was a rather bruising
time when the argument on the whole issue of the identity of the
BBC World Service was raging.
(Mr Byford) I remember it well.

Mr Rowlands: We should like to pursue those
issues.

Dr Starkey

96. I want to talk about efficiency savings
which are proposed to be quite considerable. How much of those
efficiency savings will come from frontline journalism and how
much from management overheads?
(Mr Byford) Firstly, the whole strategy based on that
document you have seen in the past and today is that rising costs,
which obviously the World Service like any organisation faces,
should be as much as possible met by efficiency savings internally.
We want to continue a programme of efficiency, thereby any investments
we do win in spending reviews can be put as much as possible into
investments for the future. The efficiency savings programme is
on average around 2.5 per cent savings per year. It is complemented
by certain strategic savings initiatives such as reduction in
short wave in the most developed parts of the world. Let me stress
to you that that is not Africa but it is in those areas where
we shall not need the level of short wave that we have today and
therefore we can re-invest that money into developments for the
future. How much of it is in frontline journalism and how much
of it is in management? The level of management costs in the World
Service, as someone who has worked in many areas of the BBC, are
low. The overall level of monies invested outside of content and
delivery in the World Service is 11 per cent and we have committed
ourselves to taking that down to 10 per cent. Compared to the
wider BBC that is a very, very impressive figure. In efficiency
savings, what we are trying to do is make what we do in the way
we work, in the way we operate, more effective and efficient.
We do not want to damage our outputs, we do not want to dilute
quality and we do not want to dilute our frontline presence. On
the other hand what we must do as well is concentrate and focus
on finding more efficient ways of producing our material, eradicating
waste wherever possible. I give you one example. We have 43 language
services, we have done a very detailed benchmarking exercise,
which you would expect, of all language services to look at tiers
of management. Where we can streamline and where there can be
greater consistency, we should do it.

97. Can you answer the actual question on how
much the savings are going to be made in frontline journalism?
(Mr Byford) I do not have a precise figure on actual
frontline savings in journalism. The whole premise is that we
would not be doing that, we would be looking at our operations
and seeing where we could find those efficiency savings which
make us as effective as we are now and more effective for the
future because we are then utilising those savings for developments.

98. What percentage of your total budget is
spent on frontline journalism anyway, to give us a feel?
(Mr Byford) I would say the vast majority. Taking
away delivery, transmission, from the budget, then of the total
content the World Service is very much a people organisation.
The vast, vast majority of its monies goes in people, whether
they are at Bush House or whether they are across the world helping
support production of the programming. That is where the vast
majority of people are and that is where the investment goes.
(Mr Hind) May I illustrate that? The five regions
the World Service operate with our language services spend around
£51 million a year in editorial production costs and in news
programming and non-news programming in English we spend about
£48 million a year, so very, very significant proportions
of the overall World Service budget flow directly into programme
making. The key point, just to add to what Mr Byford has said
about efficiency savings, is where one can find ways, for instance,
of more effectively rostering staff, reducing the cost, then we
do that and it does not mean there is less productive effort going
in, it just means the resources are used in a more efficient way.

99. I wanted to move on to take up some of the
issues raised by the trade unions. I imagine you have seen a copy
of the submission?
(Mr Byford) Yes, I have.